As we head into summer, the latest economic data brings a mixed bag of updates—some encouraging, some cautionary. Inflation is easing, home values continue to rise, and unemployment claims are creeping up. Here’s a breakdown of what happened last week and what to watch moving forward.

Inflation Is Trending in the Right Direction

The Fed’s preferred inflation measure, Core PCE, moved down to 2.5% year-over-year in April. That’s a step closer to their 2% target. Headline inflation also ticked down to 2.1%.

Shelter costs—about 18% of this inflation measure—are still showing as high in government reports. But real-time data from sites like Zillow and Apartment List suggest rents are softening, which could lead to more improvement as those numbers catch up.

What’s next? We might not see much more progress on inflation in the second half of this year because the monthly figures from mid-to-late 2024 were already pretty low. But early 2026 could see bigger gains as more recent, higher monthly readings get replaced.

Home Prices Are Still on the Rise

According to the Case-Shiller Home Price Index, home prices rose 0.8% from February to March (before seasonal adjustment), and are up 3.4% compared to last year. The 10-city and 20-city indexes showed even stronger annual growth.

The FHFA House Price Index told a similar story—up 0.8% monthly and 3.7% annually. Just a note: FHFA only includes homes with conventional loans, so it doesn’t capture cash or jumbo purchases.

Bottom line: Tight inventory and consistent buyer demand are still pushing prices up. A $600,000 home appreciating at 4% annually gains $24,000 in equity in just one year.

Pending Sales Take a Dip, but Buyers May Benefit

Pending Home Sales dropped 6.3% in April after a solid March, according to the National Association of REALTORS. This report tracks signed contracts on existing homes and usually points to future closings.

All four regions of the U.S. saw declines. Even though more homes are hitting the market, total inventory is still below where it was before the pandemic. That said, with supply inching up and demand easing slightly, buyers may be able to negotiate better deals.

A Slightly Better GDP Report

The second estimate of first-quarter GDP showed a small improvement. The economy contracted by 0.2%, better than the earlier reading of -0.3%.

The dip was mostly driven by an increase in imports and a cutback in government spending. Since imports are made elsewhere, they count against GDP. On the positive side, consumer spending, investment, and exports helped cushion the impact.

Jobless Claims Are Climbing

Initial unemployment claims rose by 14,000 to 240,000—the highest level since late April. Continuing claims increased to 1.919 million, a level not seen since November 2021.

This signals that people are staying unemployed longer and employers may be more cautious about hiring right now, especially with uncertainty around tariffs and economic conditions.

Market Snapshot

Mortgage bonds had a strong end to last week, breaking through both the 25-day and 100-day moving averages. They’re now in a tighter trading range with the 50-day moving average acting as resistance. The 10-year Treasury yield also moved lower and closed below its 100-day average.

Source:

This recap is based on market insights from MBS Highway, one of the top resources we follow for housing and economic trends.

Inflation Slows, Home Prices Climb, Job Market Shifts